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Slower declines in permanent and temporary staff

Slower declines in permanent and temporary staff appointments in May

The Recruitment and Employment Confederation (REC) and KPMG Report on Jobs published today provides the most comprehensive guide to the UK labour market, drawing on original survey data provided by recruitment consultancies. Todays report shows that the job market deteriorated at a slower pace in May, as the rates of decline in placements and billings eased further.

Weaker falls in staff appointments...
Recruiters signalled another month of lower permanent and temporary staff appointments during May. However, the rates of decline eased further from recent records to the weakest in ten and eight months respectively.

...reflecting slower drop in demand for staff
Although vacancies continued to fall in May, the pace of decline eased further from Februarys record to the slowest in seven months. Weaker reductions in demand were registered for both permanent and temporary staff.

Candidate availability continued to rise at a substantial pace...
Consultants indicated a further strong increase in the supply of candidates to fill jobs in May, which they frequently linked to redundancies. Although easing to a seven-month low, the rate of growth of permanent staff availability remained considerable. Similarly, temp availability rose at a rapid pace, albeit the slowest since last October.

...maintaining downward pressure on wages and salaries
With the supply of candidates continuing to outstrip available jobs in May, pay rates remained under pressure. Starting salaries for people placed in permanent jobs decreased at a sharp pace (albeit a four-month low), while average hourly pay for temps also fell.

Kevin Green, Chief Executive of the REC, says:

This months Report on Jobs shows that vacancies and appointments continue to decline, however there are some signs of recovery. For example, sixty per cent of recruiters reported either a stable or increased demand for temporary staff in May.

This continuing dependency on agency staff further underlines the need to ensure that the current consultation on implementing the Agency Workers Directive does not jeopardise the viability of agency work. On Thursday of this week, recruiters and employment bodies will come together at the Agency Workers Summit to demand that the implementation be delayed until the last possible moment in 2011. Recognising the contribution of flexible workers to businesses is the core message of our National Temporary Workers Week which is taking place this week.

Mike Stevens, Partner and Head of Business Services at KPMG comments:

There is now some reason to hope that the UK jobs market has overcome the worst, at least for this phase of the recession. For the third successive month we have seen a slowing in the rate of decline in both temporary and permanent staff appointments. Demand for staff is still falling but much less fast than at the beginning of the year and many employers seem to be holding off shedding staff and contemplating recruitment.

However, it remains difficult to build real optimism of an incipient recovery because most of the world remains mired in the depths of recession. In addition, the uncertainties of public sector spending associated with the final year of a government that is losing the capacity to borrow make it all the more difficult for businesses to contemplate the investment in people, ideas and capital spend that would begin to show evidence of a sustainable recovery.

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